Alleima AB (publ) (ALLEI) Earnings Call Transcript & Summary

Good afternoon, and welcome to Alleima's Capital Markets Day 2025. A special thank you to all of you joining us here today at the historic Vasa Museum, but of course, also welcome to you watching online. My name is Andreas Eriksson, Investor Relations Officer at Alleima, and I'll be your moderator today. We've just seen a short film showing how Alleima's materials and innovations advance industries around the world, making them safer, stronger and more sustainable. That story is all about progress, about looking ahead, shaping the future through advanced materials, but value creation could also mean taking care of what you already have, and that's why we're here today at the Vasa Museum. Alleima is the main partner of the museum's ambitious restoration project support Vasa. And the pins you see on me and all the other speakers today represents just this important initiative. Before we kick off, safety is always a top priority at Alleima. There's an emergency exit located at the back of the room, and there are several emergency exits throughout the building, all marked with the green exit sign. The assembly point is located on the large lawn outside towards Junibacken. And for you watching online, I trust that you're aware of the safety procedures of where you're located. A few other housekeeping notes. We're broadcasting live today, meaning everyone in the room will be filled, but only from behind. And there is also photographer taking photos, but he will focus on the speakers and the general atmosphere in the room and not focus on individual guests. And if you have any concerns, please don't hesitate to let us know. We're here today to take a closer look at Alleima, our current position, our view on several end markets, strategic priorities and much more. You'll hear from Goran Bjorkman, President and CEO, who will share an update on our strategy for profitable growth; Olof Bengtsson, CFO, will then give you our view on how Alleima's strong financial position supports that strategy; and finally, our 3 divisional presidents, Carl von Schantz, President for Tube; Robert Stal, President for Kanthal; and Per Eklund, President for Strip, will dive deeper into their respective areas. We will finish off with a joint Q&A session. And for you watching online, you can submit your questions at any time during the program in the interface on your screen. And with that, let's get started. Welcome up on stage, President and CEO, Goran Bjorkman.

Thank you, Andreas. Also from my side, a very warm welcome also to you online. My name is Goran Bjorkman. I'm the CEO of Alleima. It's been a little more than 3 years since the listing of Alleima and about 2 years since the last Capital Markets Day. And despite the turbulent market we see right now, I'm really pleased with the performance of the company. And I would say the main messages today are that we really have improved the financial foundation of the company. We are more profitable and less volatile than we were just a few years ago. This has been achieved through focused sharp strategy execution. And the last thing, I think we have the right prerequisites to continue this development. We'll dig deeper into the details of that, including a small part where we will look at how we view our different businesses from a shareholder value creation point of view. We'll also dig deeper into the respective divisions, both their performance and their strategic direction. I think I'm missing a clicker. There it is. Thanks. But let's start looking at who we are today, I mean we are a very niche company. We're high value-added products in advanced stainless steel, other special alloys, ultrafine medical wire for medical applications, including components, and as well as the products for industrial heating. We have a strong market position across a wide range of niche end markets, serving 10 different customer segments, and our fully integrated value chain from strong own in-house R&D to finishing operations and a global sales force. I said it many times, our products are designed for very specific customer applications in the most demanding industries. Normally, we have a strong position. Normally, we are #1 or #2 where we decide to compete. So just to share a few examples with you, starting with Tube. In the Tube, we're #1 in umbilical tube for the oil and gas industry. We're #1 in aerospace titanium and #1 in steam generated tubes for the nuclear industry. All these industries, of course, really appreciate the high quality and the technology leadership. And this is both from our customers, but also especially also from our end users. If you look at Kanthal, we are #1 in products within industrial heating, with exciting examples like Flow Heaters, electric process gas heaters that Robert will talk more about later on. I'll say we're #2 in medical wire. There are some competitors with a broader market -- broader portfolio than we have. But in the areas where we compete, we have a leading position. And to me, this is just potential for continued increase of our market shares. And if we look at the development in medical wire, I would say this is one of the successes in Alleima if we look back a few years. In just 5 years, we have quadrupled sales. We've gone from one single production unit in the U.S. Now we have one more in U.S., several in Europe that has come through acquisitions. And we're right now in the phase of establishing the first unit in the APAC region with the investment we do in Malaysia in the Penang. If we look into Strip, they are #1 in compressor steel. And I'm really happy to see that our latest material already now is starting to be designed into new compressors. Normally, when we talk about medical, we focus on Kanthal wire, but also the other 2 divisions has good products in the medical industry. And for instance, Strip has a leading position for bonesaw applications. We're serving, as I said before, 10 different customer segments. So I would say this is one of the strengths with Alleima, our broad exposure. Of course, some of these segments are partly cyclical. But in the total, it reduces the volatility of the whole company. Since we are engineering for the most advanced industries, this not only helps the volatility, it also gives us good opportunities for future development. Of course, these segments are extremely large, but in the small niches where we decide to compete, we have really good market shares. And if we look at the share of the revenue, of course, that will change over time. And this is due to our mix shift towards increased growth in segments with higher market growth and more profitability and also better capital efficiency. I will come back to that later on because that's an important part of today's agenda, but first, let's start looking at the present market situation. Of course, we see the turbulent market right now with the geopolitical issues, trade problems, and that is affecting many industries, including ours. We see that in segments like industrial, we see it in petrochem, we see it in the industrial heating, while other segments continue to be strong like oil and gas, nuclear, medical. And if I should look at this from a regional perspective, I would say, of course, the U.S. market is affected by the high -- still high import taxes to U.S., still 50% tax on imported steel to U.S. We have been successful in passing on these costs to our customers. And with all the added value operations we have in the U.S., of course, we don't need to add as much price increases in percentage as the taxes. Johan will show this more in detail later on. But for sure, our products has become more costly for our customers. And of course, this has somewhat softening on the market in the U.S. I think Europe is, from a regional perspective, the weakest market right now. I think there's a series of things that has affected Europe. I mean, the war, the war came with an energy crisis in Europe, Germany really weak, European automakers really challenged by cheap and good EV cars from China. And now on top of that, Europe has been challenged from the U.S. on tariffs. Of course, this has an impact on the European industry. We see a lot of, I would say, industries hesitating to invest, and that is affecting us. APAC still holds up stronger. This is also why we -- which we announced in the quarterly report are taking some measures now to improve our operational efficiency. Actually, I received some questions last week on -- so do you view the markets going even worse or don't you see its improving? I think it's difficult to speculate, and I will not speculate. I think what is important is that we cannot trust that it comes back soon. We need to work with what we can impact, and that is our own costs. So we've taken measures now. It's a number of initiatives to reduce our cost with roughly SEK 200 million on an annual run rate. And roughly 75% of these cost improvements would be permanent. So if volumes come up again, roughly 75% will continue as improved cost efficiency. And we expect run rate savings at full SEK 200 million around end of next year, I would say. Despite this and despite the challenges, I think we are showing resilience. I think we have improved both the margins and the volatility the last years. Of course, this has to do working with cost flexibility. And of course, it has to do with improving some of the units. But we say it's 2 main reasons for this development. The first one is operationally. I think we're much more reluctant today to fill the mill in downturns to any price. We had a tendency to do that before. We rather work with our cost flexibility and other measures instead of filling the mill with, I would say, poor prices and poor mix products. Even though maybe some of those orders, we could always book more orders, might be sort of positive from a contribution point of view, maybe also positive from a cash flow point of view. But the main reason why we are reluctant to do this because after downturn normally comes an upturn. And when the upturn comes, you don't want to sit with a long order backlog with poor prices and poor products. Because when demand starts to come back, price environment improves, then it's good to have a short backlog, and we are ready to take orders. So that is the operational reason. There's also a strategic reason. And that is we already, I would say, have good impact from targeted growth in certain segments, not everywhere. I mean if we just look a few years back, we were much more dependent on the Tube oil and gas business. That is, of course, still very important. I would say it's even better today than it was some years ago. But we've grown in other parts. We made the company much more balanced than it was just a few years ago. For instance, the improvement we've seen in Kanthal, both in the industrial heating part and especially in the medical part. Also in chemical and petrochemical, it's much better today than it was some years ago and especially due to the growth and the really profitable growth we see in the APAC region. And to continue this development is really the core of the Alleima strategy. If you look at how we view that our addressable market is growing, it looks really good. Even to be honest, it doesn't feel like that right now. But mid- to long term, we view the addressable market as growth as positive, around 6% CAGR. And of course, some of the segments even better than. We have decided to target 5 segments as the priority when it comes to growth, or at least the priority when it comes to capital allocation for growth. And with capital allocation, I mean, larger CapEx and M&A. These segments are -- I mean, you see them here, medical, nuclear, chem, petrochem, hydrogen renewable energy and industrial heating. So how do we come up with that priority? And it's a balanced view from certain perspectives. Of course, we look at how the attractive the market is. And with that, I mean size of the market and the growth of the market versus our own position. We look at profitability and profits, also size matters and of course, capital efficiency. So these segments are then our priority when it comes to capital allocation. Someone might wonder why not tube oil and gas? Well, tube and oil and gas is really important for us. But we look at the long-term projection, and Carl will show it later on. I mean, there is a positive growth, but not in the level of some of these other segments. But this is not a binary thing. Of course, if we see that we have bottlenecks in oil and gas restricting our sales, we are not stupid. Of course, we're going to invest in reducing those bottlenecks. But I mean, for me, this is more about building new factories, doing acquisitions. And just to be clear, not all investment decisions are based on this. For instance, safety, cost efficiency, maintenance investments, that is based on other kind of decisions. This shows how we sort of execute our strategy in what areas we have initiatives to drive the company in the direction I just explained. Of course, we still focus on profitable growth. That is the word pretty often used. For us, profitable growth means growth that adds shareholder value. And we define that as return above cost of capital. And we will show you a little bit later on how different products in our portfolio act in that way. But we also have a contribution business. That is also important. It covers a lot of cost for the group. But in order to grow, that growth has to be creating value. The strategy also focused on continuing to be the materials innovator and technology leader. This is, of course, about developing our long-term product portfolio. Operation and commercial excellence. This is about continuous improvement, automation, digitalization. It's about improve our way of how we understand customer value, price leadership, go-to-market models. And sustainability, I mean that is, of course, also linked to growth because also that should generate customer value. And then we have our common operating model, strong in-house R&D, our fully integrated value chain and the decentralized organization setup. So let's look into some more details on profitable growth. When we look at that -- we look at it from our 3 building blocks: business development. Of course, this is about our technology leadership. It's about our focus on R&D. But it's not only about sort of making the next good material, next good product, which is, of course, important. It's also about our deep understanding of customer application, serving the customer with the existing portfolio, making them create value based on what we already have. Growth investments is, of course, that's a continuation of business development. When we are successful in business development, maybe run out of capacity or understand there's a new capability that we need, then we need to invest. And in some cases -- because the main part of our growth is organic. But in some cases, if we view that the organic route maybe is not fast enough or maybe not possible, M&A comes into play. That is normally focusing certain product portfolio, some missing capabilities or it could also be a geographical footprint. So let's dig a little bit deeper into business development. I will say this is the foundation of our growth strategy. This is about the technology leadership, the focus on R&D. I would say it's the DNA of the Alleima company. Really long-term customer relationship. It's built on collaboration. It's built on trust. And of course, as I said before, extensive know-how, not only in our own metallurgy, also in customer applications. The integrated value chain, I think, is core for us. And the combined, I would say, hard to copy, combined know-how along our internal value chain makes it possible for us to produce our, I would say, pretty complicated products with good efficiency and good yield. Our products are very often positioned early in the value chain. But still, it's very critical for customers and end users' applications. So let's look a little bit about some of the ongoing R&D projects. Of course, when we do our prioritization, we look at customer needs, current needs and also, of course, future needs. And if you look at the trends, customers is asking for lighter and stronger materials, materials that withstand higher temperatures and even more corrosive environments, tighter tolerances, better fatigue resistance and sometimes also coatings. To give you some of the examples we have, we are continuously widening our high nickel portfolio. This is for demanding industries in, for instance, chem, petrochem, in aerospace, also in renewable energy, very often looking for properties -- material properties like strength, temperature and corrosion resistance. We also developed a next-generation super duplex that is targeting heat exchangers, and heat exchanger with even more challenging corrosion environment and also for customers that ask for longer tiebacks and even higher pressures. We are already today delivering tubes for SMR, that is water cooled SMRs, nuclear reactors. But there's a lot of development work ongoing for the next-generation nuclear, what we call advanced reactors. That is cooling medias like helium, sodium, lead, molten salt. There's a lot of activities ongoing. We invest quite a lot of R&D into that. We think that is a really good future opportunity for us. If we look into medical, very often medical is about developing the next generation of an already existing feature or application. And I think medical is really a good role model within Alleima, how to work very close with customers. And to mention a few interesting areas, glucose measurement. We also have advanced heart monitoring. We also developed a next-generation umbilical, basically the same corrosion resistant as the current material, but with higher strength. That makes it possible for our customers to design lighter umbilical cables. That is, of course, always good, but it's especially important if you want to go to even deeper wells or even the weight of an umbilical could be an issue. We also developed -- that's an innovation, first of all, rather small powers now it's larger power Flow Heaters within the Kanthal division. We will soon show you a film. This is about project where the customer asked for Flow Heaters above 850 degrees. This not only that we managed to deliver that, we also delivered for the customer helping them to improve the position, efficiency, and sustainability. [Presentation]

Dr. Markus [indiscernible] a fantastic person I have to say. Moving on to CapEx and growth investments. As I already said, that, of course, a natural continuation if we are successful in business development. Most of the investments are in the end of the value chain, I would say. So I think we should look at some of the ongoing examples of what we are doing. I would say that one of the most important differences being an independent company instead of being a small business area in a large group is that you are in control of your capital allocation. To me, that is fundamentally important if you want to execute on the strategy. And I think we are. I will not go through all of this, but let's look at some examples. Let's look at the examples that we took decisions last year. We're adding a new vacuum remelting furnace. Some materials have to be remelted. And this allows us for a continued growth of really advanced materials. We're also growing the Kanthal industrial heating business in Japan. I mean, I've been around for some while. And according to my experience, if you really want to be successful in Japan, it's good that you have footprint in Japan. And Kanthal has had that for some time, and now we have grown out of the capacity. So we are adding capacity. We also took the decision last year to reopen Tube Mill 68. That was closed roughly a decade ago due to the downturn in the nuclear industry. Our nuclear industry is really going up again, and we decided to invest. So we're investing and we will start up that factory end next year. And by that, we're adding 60% capacity for steam-generated tubes. We also, as I said before, took the decision to open our first production unit for medical wire in the APAC region, where we're now investing in Malaysia, in a town called Penang. That is a medtech center. So already now we have already buying customers and potentially future customers at that place. I think all of these are examples that we are executing our strategy and that we grow in these selective segments that we have pointed out. M&A, as I said, normally focusing a certain product portfolio, certain capabilities or geographical footprint, sometimes also if we could grow in the value chain. Of course, also M&A, we search for acquisition targets in the targeted segments. And that could, of course, be wrong, which is okay. I don't think there are that many opportunities, for instance, in nuclear, maybe not in chem, petrochem either. The organization could prove me wrong, that's okay. But I think the main opportunities we right now see is in industrial heating and in medical. That's how we're focusing our efforts right now, where medical has the highest priority. And if we look the last 3 ones, we did are all focusing medical, 2 of them in medical wire in Kanthal and 1 for Tube. And the Tube case where we add capability for small-sized bars is also actually targeting aerospace. This slide illustrates, I would say, the overall strategic direction of Alleima, which is a mix shift strategy. I think we've already, as I mentioned before, been quite successful. We've already balanced the company more than we were some years ago. We want to continue this development to grow faster in the targeted segment and grow less in the industrial segment. It is in the industrial segment where we most of our contribution business. So the goal is to grow the target segments to 45% to 50% and reduce industrial to somewhere between 10% and 15%. This picture illustrates how we view our businesses, some of the business from a return point of view and growth point of view. I really understand that there might be some people in the room that would love to see some numbers on this, not today. But I will walk you through because this has an impact on how we prioritize our different businesses. So we start with group #1, very high return, really a value creator in our company. Main focus is to grow. There are more value creation by growing this than to improve margins a little bit. And the return is so good, so we could even grow this with, I would say, leverage as low as current margins. And if growth is really high, we could even go a little bit lower than current margins. Tube -- sorry, not tube. That was your target. Kanthal medical wire is in that group. If we go to Group 2, also good value creators, not as high as medical wire. Here, both growth and margin improvements or return improvements generate additional value. We want to grow these businesses as well. But here growth comes with a very clear target. We have to grow that with a positive leverage. Growth has to generate more -- a higher margin than we have today. Here, we have some of the products or segments. Industrial heating is here, Tube, steam-generated tubes for the nuclear industry is here and most of the chemical and petrochemical as well. If we go to Group 4, take that before Group 3, I mean here, return is lower. So the main priority here is to improve margins and then improve return. Here, we have, for instance, Tube OCTG and Tube Aerospace. I think we've done really excellent in Tube OCTG. I think just the latest year, we have improved that from traditional actually contribution business now to a margin contributor to the whole group. And we want to continue that development. Tube Aerospace, I mean, I think we need to improve the return in that business. And I think that is important because we see the market growth as very positive. So then go to Group 3. Here, we view the growth possibilities as lower than the other businesses. That could be for reasons like the market is not growing so fast. It could also be that we already have really high market shares. So here, the main target is to defend position and defend return. Here, we have, for example, Tube umbilicals and Strip compressors. Just wanted to share with you, this is how we reason when we set targets and plans for our individual businesses. And sorry, there were no numbers. Let's move over and see to other areas where we can improve margins, and that is we add on our operational and commercial excellence. We start with the graph to the left, that is our growth plans. We want to grow also in volume some, but what you see is that the revenue growth is much higher than volume growth. Of course, that comes with I already described, where we focus on some segments to grow faster. But it's also about, let's say, mix improvements in the individual segments and also price increases. If you go to the left, we can see 3 bars improving margins. The first one is what I just went through. Of course, this mix shift strategy will improve margins in the company, but there are also strong commitments in the divisions to improve operationally and commercial excellence. Of course, many, many initiatives ongoing in this area because the nature of them is like continuous improvements, but I'd like to mention some examples when I look at the priority list we have today. When we compare ourselves with the competitors, we come out strong in areas like being global, or as we say today, we're local in many places, our product portfolio, our quality and the technology leadership. And that brings us to a leading position as a technology that also gives us a price premium. And that is exactly how it should be. We should not be a good enough low-cost alternative. But we look at cost position, I think there is, in some areas, potential to improve. Of course, technology leadership and premium comes with the cost. That's natural. But we cannot afford not to be as good as the potential we have. And we have done some more detailed studies, looking at some of our products compared to our competitors. And based on that, we have done some findings, things where we can improve. And of course, that is part of our priorities. We've had a Tube unit, I would say, that has been underperforming. Now it's much better. And the reason why it's now is much better is that we have had a structured approach, how you work with improvements. And this is not investments. It's about how you work in the day-to-day and strategically to drive continuous improvement and have a structured way to drive that. That I know that Carl now is looking at maybe that is something we could replicate across the whole Tube division and make that way of working as, I would say, the operational framework within Tube. If you look into Kanthal, the development in Kanthal has been fantastic. And I know some of you have been to Kanthal factories. I mean there is an automation potential in Kanthal. We are right now developing a road map how to automate more and drive more efficiency in the Kanthal units, especially targeting our heating operations. In Strip, not a small part, an important part from a volume point of view in Strip. We don't have the position where our price premium compensate for the cost we have. So we have set up a program how we should drive efficiency improvement at Kanthal with some investments where that part of Strip has to be profitable or even better profitable than today on current market prices. That is one of our priorities. I think Per will show that later on. Also in commercial excellence, we have a number of initiatives. All divisions are focused on improving value sell. I mean, to be honest, we are a product company, and we should not leave that, but I think there is a potential of being even more sort of understanding customer values. By understanding customer values, understanding the customer's next best alternative, I think, gives us good sort of data on how we can optimize our prices. This is about sales framework, about sales playbook, et cetera. It's about how you structure, how you prepare, how you execute, how you follow up the sales process, including training. I know that's ongoing in all divisions. There are also some initiatives about changing go-to-market models. So I'd like to mention Tube. In Tube Americas, this is the Tube American regional business. We are right now investing in improving the sales force. And the reason is that we want to have an even more close relationship with end users. Today, we are too much dependent on the distributors. So that is an action ongoing in the Tube Division. In Strip, in a way, it's the other way around. Strip's normal sales process is sort of key account sales. And by that, I mean, we are limited on how many resource we have, and we have difficulty to reach really smaller customers where there potentially are a lot of. Now Per will show that later on, but what we're doing now is to increase the number of channel partners to with that, meet more smaller customers. And it's not only but especially targeting the knife steel business. All 3 divisions are also increasing, I would say, the focus on product management. Many reasons for that, but one obvious one is we want to have an even more close relationship between sales and R&D. So many activities to drive improvements, many activities to drive margin improvements in the company. I know we have a Q&A later on, but I think there is one question that I should answer already now. And first then I need to ask myself that question. So with all improvements you've done in the company, and with all the potential you have, why don't you change your financial targets regarding margins? I think all the analysts are laughing here. That's a relevant and very rational question. And I think not yet, not right now. And the reason for that is, I think there is too many market uncertainties right now. And we don't know where the dollar versus the krona development will take us. So I think the timing is not right. But of course, what you see is that we have a lot of initiatives with a lot of potential to drive the margin of the company. Let's move over to sustainability, and I will start with what is most important, safety. I mean we have improved. I'm not sure I'm pleased with the level, but I'm really pleased with the improvements we have done, really good progress. We are at the lowest ever accident frequency in the company, I think history with 160 years old, but at least numbers that I have seen, which is, of course, really good. And of course, it's the result of a really dedicated work throughout the organization. A lot of the focus we have is how we act in hazardous environments, focusing having the right PPEs, how we have safety instructions, how we work with behaviors, trainings, et cetera. Of course, that is important. We should continue to do that. But I think we need to focus more on not only how to act in hazardous environment, also making some of the workplaces less hazardous. I think we need to spend some more resources on, for instance, automation so that we can separate the operator with the machine. So let's look at our sustainability targets, and you can read them here. Essentially, as I said before, sustainability is a business enabler, and there are so many perspectives on sustainability. Number one, that is to be a responsible employer. That is about safety, as I just touched upon. It's about how we treat our people. It's about DEI. Right now, there's a lot of political discussions around DEI. But let me be clear, for Alleima, this is not politics. At Alleima, we are sure that diversified teams perform better. We're also sure that if we treat our people with respect, give them the chance to develop according to their potential, performance will improve. And of course, an including leadership, I think, is crucial for driving improvements and performance. If you look at the climate side of sustainability, our targets has now been validated by SBTi. I think we are already world-class when it comes to at least Scope 1 and 2 from a CO2 efficiency point of view, but we could do more. The target is to reduce it by 54% starting in 2019 until 2030. We are right now roughly on 40. So we removed -- reduced it by 40%, but we could do more. Scope 3 is a little bit more new to us. There, the target is to reduce by 28%. A lacquer approach towards this. The approach is that we don't talk that much about it. We pick the technology we need at a certain moment and keep a flexible approach. But for sure, to meet these targets, I guess we need to electrify some of our heat treatment processes. But for me, it's absolutely important that when we do that, it has to create additional customer value. I know companies have both invested a lot, also increased their energy costs to claim a fossil-free steel with some problems today because there is no one wants to pay that premium. And we should not end up in a situation like that. But for sure, we are the Scope 3 of our customers. So that should be additional customer value. Another part is, I mean, by reducing our CO2 emissions, there's a potential to reduce future cost of CO2 taxes. So what I'm saying, concluding, is that there has to be a decent realistic payback when we invest in reducing our own CO2 emissions. To stay about 80% circularity, we are there right now, it's a continued challenge. If you see this mix shift journey with much more advanced alloy and less, I want to say, more standardized stainless steel, it's a really tough target to stay above 80%, which is our target. And I said it so many times, our largest possibility to drive sustainability, that is through our products and offers. And that is why we have a target where the products which we define as supporting sustainability should grow faster than average Alleima. Last year, they were on 24%. This is products for the green transition. It could be renewable, it could be hydrogen, it could be nuclear, it's also electrification through industrial heating, also energy efficiency through the compressor steel in Strip and also medical. It's not only climate also makes people live longer and have a better life. And as I said, these products should grow faster than average Alleima. We show you a film with some interesting examples. [Presentation]

So to summarize, I think we clearly have improved the financial of the company. We are less volatile and we're more profitable company today than we were just a few years ago. And we've done so through sharp strategy execution. And with a solid financial performance, we have the right prerequisites to continue to do so. So that ends my part. Now I would like to introduce the next speaker on stage, which is our new CFO, Johan Eriksson. He might be new in the role. He might be new to you, but he's not new to me. I mean he's been heading the business control function in Alleima for many years. So Johan and I have worked close for, I don't know what is it, 6, 7 years. So welcome up on stage, Johan.

Thank you very much, Goran. And actually, it's 8 years. But I'm the finance guy and you're the engineer. So -- and again, very welcome, everyone, to this CMD, both here in the room, very nice to see you, and online, of course. I think it's very obvious and listening to Goran also that we have the financial prerequisites for executing our strategy. And I will walk through and comment on where we are financially, touching on areas like EBIT, capital allocation, CapEx, cash flow and capital employed. But before we get into that, I want to touch on 2 current topics that have been in focus the last couple of quarters, and that's currency and tariffs, U.S. tariffs then. I won't talk about global tariffs everywhere and talk about the U.S. ones. Starting off with currency then. When you look at our cost base, it's a fair proxy to use the personnel numbers, the FTEs then to see where our cost base is located and how it's split between different countries and then different currencies. And that you will find on the graph on the bottom left-hand side. And as you know, we have a strong footprint in Sweden, but we also have significant capacity in other countries, which then partly offsets the currency exposure in those countries. But there are, of course, 2 countries that stick out as the main exporting countries in our supply chain, and that's Sweden and the Czech Republic, where we, in both cases, produce for other markets. In the second graph, you can see also that the main sales currency is U.S. dollar, where we have the biggest net exposure and the euro is the second largest. But overall, the production and thereby our currency footprint, that's who we are, and that's something we continuously handle. And to some extent, you could say that local for local and by that, meaning that we have value-add activities in the U.S. for the U.S. market and in China for the Chinese market as 2 examples. That allows us to mitigate some of the exposure. But we also have, you could say, a natural U.S. dollar hedge from our exposure to raw materials where several are priced and traded in U.S. dollars. And then we have hedging, of course. And that's something we actively work with. Here, time to delivery on orders that are exposed in other currencies than what we produce in or produce the product in plays an important factor. So the time lag. And in general, you could say that we hedge our projects, so the project orders, and that is in order to safeguard the margin on that project. And not only then do we hedge the currency, but if needed and if possible, we also do it on raw materials for that order. But over time, of course, currency fluctuations are handled through price and productivity in our business. But given that our biggest net exposure is U.S. dollar, it's also could be interesting then to learn what that means from a U.S. tariffs point of view, and what we have seen so far. And first of all, and we take -- I've taken the revenues 2024 as a reference point, just so we can have something to start off with. First of all, there is, of course, a big part of our business that goes to other countries than the U.S. So that's a good fact to start with. And when talking about the U.S. then, in general, it's worth noting that the products we make and sell to the U.S. have no or very limited local competition and no fully integrated local competition in the U.S., meaning that the competition that is there also has to import material. So that's an important fact. And if we take 2 of the products that Goran highlighted in Tube, for example, the steam generated tubing in nuclear and the umbilicals in oil and gas, there is no local competition. So all the competitors are based outside of the U.S. So if we add that then to the last year's sales, you could say that, well, the finished products is sold to the customer without any tariffs. I mean the customer takes care of the importing in that sense. So that's -- and that's independent then of which supplier they choose. Then we have the value-add activities that I talked about earlier, the local for local, you could say. And there, we can take, again, Tube as an example. If we then import bar from the back-end system in Sweden, and then we add -- do the extrusion and the cold working on that product and have a finished tubular product to sell in the U.S., that's quite a lot of the value add that's actually happening locally. Well, that means then that the relative part of the final price, the impact from the tariffs will be, well, you could say, modest at least. And then -- so -- and that's the key that the value add takes place in the U.S. So internally sourced, but with high local value add. And then we have the final category, which is when we do less value add. We still import the material. We could take the bar example again, but we only do the extrusion as an example, and then we sell it. Then, of course, the relative part of the tariff on the final price will be higher. It's mathematical. But what have we learned so far then? I mean, there's been going -- tariffs have been going on for a couple of months at least. And what we've seen so far is we have the ability to pass on the tariffs to our customers. And we haven't seen any significant changes in customer behaviors apart, of course, what Goran alluded to, the hesitation and general uncertainty that the overall sort of tariffs and geopolitical situation has created. So that's our finding so far in this area. So let's move on then to our financial development. And also, as Goran touched upon, I think we've become a much more solid and less volatile company when we look at our profitability. We can take the average 15 to 20 and compare it to the average 21 to 25, and we can see 140 basis points higher average for the adjusted EBIT margin. And that despite that we have seen some challenges -- challenging business climate in parts of our business for the last 12 to 18 months. But with that said, we're sure that we can continue to improve and especially through the focus we have on the prioritized segments, as we've talked about and through the capital allocation possibilities that we have. So let's move into that then. I mean, it's not shying away from that we do have a strong balance sheet. That's a really good starting point. And we are cash generative. So we are generating operational cash flows. And roughly SEK 400 million, you could say, annually is needed for maintenance CapEx, so to keep the machine running, if you will. And what can we do then with the excess cash that we create? Well, we could always sort of increase our cash balance. I don't know if -- well, that could be nice. But obviously, we also distribute dividend to our shareholders. And then we have the possibility of growing through -- organically through CapEx or acquisitions and that in strategically prioritized areas. I could mention also that, in addition to this, we do have an undrawn committed revolving credit facility with our 6 core banks of SEK 3 billion as well. And you might think so, but we're not afraid to take on debt. It just needs to be for the right reason. So keep that in mind. But moving back to the CapEx then. So what have we seen and what sort of is happening in that area? Well, it's very obvious that we've increased the pace the last couple of years to what probably is a normal level for us now, I would say, or especially when we have these growth CapEx initiatives. So while we, in 2020 and 2021, cut back on CapEx to protect cash flows in the pandemic downturn, we have now spent more and increased in different types of CapEx, but especially in the growth CapEx. And through these growth investments, we want to position ourselves to capture future growth and to improve our competitive position looking forward. And where are we then allocating that CapEx? You might ask yourself, and Goran alluded to this picture as well, which I think is a good one. And even if it doesn't have numbers, it at least illustrates something. In our strategy, which includes then a portfolio strategy and capital allocation strategy tied to that. We aim to drive value creation by increasing the returns and the revenue growth. And we build it on market attractiveness, like Goran said, and that includes then the growth projections for the market and the market size and also our position on that market and our profitability. So we wanted to have -- we want to have a strong market position. We want to have higher profitability on that market than our average in the group, and we wanted to have lower volatility. And then we wanted also to contribute within higher-than-average return on capital. So from this, we identify what we believe to be the most attractive parts of our business and where CapEx can help us grow and improve. And looking at this then our growth CapEx currently is mainly being spent in Group 1 and 2, obviously then, but it can have an impact on other parts of our portfolio as well. So it's nothing in isolation, but focus on 1 and 2. And how has that impacted our cash flow? Well, looking at the dark red bars, this is the free operating cash flow, and that then includes working capital changes. It includes CapEx spend, and it includes lease amortizations to name a few. And these graphs clearly show that we continue to be cash generative while executing on the strategic agenda. And as I just showed you, increased our CapEx spend. But what can have an impact on us is when metal price changes, and that will then impact our net working capital, and in turn then cash flows. And this was especially notable in 2022 when we had quite a drastic increase in, for example, nickel prices and you can clearly see that reflected then in the cash flow in '22. So -- and talking about net working capital then because that has an impact on us. And it has an impact not only from the metals, but the metals are an important factor. And this is something we work continuously with. It's an important asset for us. And as I showed you in the last page, it's not eating our cash. It has the potential to do if the metal prices run away, it could then temporarily impact our cash flows quite drastically. But some of the other challenges that we are working with as we have, for example, geographical shift. So if you see that arrow on the far right-hand side, the geographical shift, especially with growth in Asia, of course, when we're sourcing from Sweden, material needs to flow to Asia. And what we experienced when the war in Ukraine started was that shipping by -- or sending by railway, all of a sudden wasn't a possibility any longer. So and that, together with other geopolitical conflicts has meant that we need them to send material by both all the way around Africa, et cetera. So that, of course, at the same time as we're having growth in that region. So that sort of impacts net working capital and lead times from that aspect. Another aspect is also the metal mix if we go towards more high-value alloys, which we in parts want to do, that can also have an impact then on the total value of our net working capital, even if the product itself will become more profitable. But -- and the overall price changes in metals also in relative terms will have an impact on the relative net working capital. So if the metal prices rise, the relative net working capital values will -- in percentage will increase. So what do we do to mitigate this? Well, we continuously work with this in the divisions. We work towards improved planning, supply chain efficiency and lead time improvements. And again, the mix shift. We're talking about the mix shift. And one of the criteria, as I just said, is that it's less capital intense to a large extent, in many of these products. So the mix shift itself should have a positive impact also on an area like net working capital. So taking that, taking the net working capital development, the CapEx spend that we just looked at and just put in relation that we roughly depreciate SEK 900 put that together into capital employed there, of course, a few more pieces to capital employed, but the entire sort of fixed asset base is in there. But what you can see is slightly increasing capital employed and that's mainly then driven by the growth investments that we're doing. And the return on capital employed that you can see on the far right-hand graph, where we measure reported EBIT in relation to capital employed in this case, excluding cash, is at the moment lower than a couple of years ago, and that primarily comes with the negative metal price effects that we've seen in the last 2 years, which in my experience, evens out over time. I mean, metal prices will fluctuate and we've had a negative trend the last 2 years basically. And so again, the journey we're on aims at improving the mix and over time, improving the returns on our capital. And where does this take us then? Well, we have a strong balance sheet, and we're very happy about that. It's a great starting point. It's a strong balance sheet that gives us room to execute also in downturns. We are well below our financial target of net debt to equity, and yet we've paid out a total of SEK 1.4 billion since listing to our shareholders through dividends. So all in all, we're a cash generative, less volatile company with a strong balance sheet, and this allows us to do targeted investments and execute on our strategy. And that's -- with that, I thank you all.

Thank you, Johan. On the minute, I think, perfect. We'll now have a break, coffee and refreshments are served just outside. We'll meet here in 30 minutes at 3:10. We'll start again. Thank you. [Break]

All right. Welcome back. I hope that you're again energized and ready for the second half of the program, where we will dive deeper into the divisions. Starting with the biggest one, please welcome Tube President, Carl von Schantz.

Thank you so much, Andreas, and hello, everybody. My name is Carl von Schantz. I'm the President of the Tube division. And I joined Alleima into this position 2 years ago. And most recently before that, I was one out of about 20 divisional presidents within the Atlas Copco Group globally. So when looking at the Tube division, this is how we look. And when you're coming in from the outside, there are a couple of things that has been standing out to me when looking at the tube business. First of all, we have strong market positions in many customer segments and markets across the world and strong market positions signaled sustained differentiation and customer loyalty which is making it hard for rivals to erode our share or to copy our value proposition. And in this presentation today, I will give you a couple of examples of our strong value -- strong market positions. Another thing that is a unique trait of the Tube division that stands out is our integrated value chain. And this is really differentiating us from our competition. And there are many customer benefits from our integrated value chain. And in this presentation, where I will now mention two, one of them is quality control. We are producing products for the most demanding environment. It could be for nuclear power plants. It could be for aircraft and spacecraft. It could be for environments of 800 degrees Celsius or more with high pressures. Our tubes can fail and the quality requirements of our customers are set at the highest standards. So as we control every step of the manufacturing process and that we don't need to work across different companies in the value chain, makes us being able to control quality in a better way than most of our competitors. And this is a real advantage because our niche in the steel industry is based on a commitment to quality. So this is very important for us. Another customer benefit of our integrated value chain is our ability to innovate with and for our customers. Our customers are often faced with new technical challenges that they come to us for support for. And our integrated value chain enables faster iteration, deeper technical insight and tighter coordination between production and R&D. And these are customer benefits that are difficult to copy in nonintegrated setups with fragmented capabilities and slower feedback. So -- and the third and final thing that when I look at this, that kind of stands out is that we're looking a bit to European-centric. 49% of our share of business is in Europe. And Europe accounts for about 20% of global GDP. It is not the fastest-growing market, but if we only adjust for our oil and gas business that is invoiced in Europe, ends up in this 49%, but our end customers are in the Americas, in Middle East, in Africa or in Asia, this 49% is more 40%-ish. So I will say that we have an attractive global footprint, and we have a good momentum of growing faster in high-growth regions. So for the last 3 years, we have delivered an adjusted EBIT margin of 10%. And we have had currency and alloy adjusted revenue CAGR of about 2%. So in addition to having done a great job with pricing, in general, the steady incremental improvement is based on 3 factors. We have increased our profitability in our Oil and Gas segment by improving productivity. We've seen excellent profitable growth in our Asia and Pacific region, and we've had a general good mix shift into more attractive business. Of course, my job and our ambition is to perform better than this and drive both growth and EBIT targets for the Tube division. And to do that, we have outlined a few strategic priorities. And the strategic priorities that we have outlined are these. We want to grow in nuclear and the chemical and petrochemical segments. We want to maintain our strong position in oil and gas. We want to further strengthen position in other growth segments, and those segments can include aerospace, space, hydrogen, renewables, semicon, medical. And we want to strengthen our performance culture and improve our ability to leverage on our strong market positions. So today, I will focus on these 3 segments: nuclear, chemical and petrochemical and oil and gas. Together, they represent 2/3 of our business. So it's a significant share of our business. I won't be speaking about our other growth segments, but I can tell you, we have really interesting developments in those areas as well. For example, in Aerospace & Space, which represent about 6% of our business and is reported under transportation. And I will also talk about this last point. So if we dive into this and start with nuclear, which is a segment that we want to grow. And in this segment, we sold products in 2024 of a bit more than SEK 1 billion and it's a segment that we see excellent growth opportunities for us in. We sell products into 3 categories here. So we have the steam generator tubing that goes into the steam generator, and that is used both for conventional reactors, SMR reactors, advanced reactors for the future, and this represents 65% of our sales and is our most important area on the nuclear side. Then we sell nuclear fuel tubes, also called cladding tubes and the house the fuel in the reactor. And then we sell nuclear tube and pipes and those are nuclear certified products that goes around different parts of the nuclear power plant. And if I focus on the steam generated tubing, which is where we see the best growth opportunities and which is the biggest share of our business, today there are only a handful of suppliers around the world, supplying products into this segment. It's us, it's a French company, it's 2 Chinese companies, it's a Japanese -- 2 Chinese and 1 Japanese company. And what sets us apart here is that we are an independent supplier. We're not tied to any specific reactor designer. We're not tied to any state authority. Our loyalty lies solely with our customers. And we will be less impacted by external factors, and this is a real advantage. We see a highly positive outlook for the nuclear industry. According to the World Nuclear Association, global nuclear capacity could double by 2040. And if you look at this graph, the line here represents conventional nuclear. The shaded area represents the uptake of SMRs, Small Modular Reactors that can be in different ways. And we can achieve -- we can really feel that this is happening. And there's lots of things to be written about nuclear. But if I will just tell you what are we seeing, what is happening to us at in the Tube division. We see big tech companies entering the industry. The rapid expansion of data centers, AI infrastructure, electrification of industry is taking electricity needs to new heights. And SMRs in nuclear offers a stable, high output, low or no carbon supply of energy for this. And based on this, we see a new wave of interest of new companies that didn't visit us 5 years ago or 10 years ago. And the list of world-leading companies that are coming and visiting and wanting to do business with us. That list is just amazing. We see the development on the nuclear side on multiple fronts. We see that we see new builds of conventional reactors. We see refurbishments of conventional reactors. We see conventional reactors and small modular reactors. And we have already sold and fulfilled orders to the small modular reactor industry, which is pretty rare. And a good sign of us being there from the beginning. And it feels so encouraging that -- and we also see customers from across the world. So we are interacting with mostly customers in North America and in Europe, but we're also present in Asia and having lots of discussions, both with customers and industry partners there. And it's so encouraging that the Tube division is a natural speaking partner to leading companies from across the world in this segment. And based on this development, we are now investing to capitalize on the opportunities that we see in the market. A year ago, we announced the expansion of our steam generated tubing capacity with 60%. And work is now progressing to have the first deliveries from this new capacity in the end of next year 2026. And it's -- and for this new capacity that is -- that we're building right now, our order backlog is very strong up until 2029. So already for that capacity as soon as we have it up, we will -- as fast as we can get it up to full capacity, it will run on full capacity. And I think one of the reasons why we have this position and why we have a full, solid order book for capacity that is not built yet, is that we've been in the nuclear industry since the inception of nuclear in the 60s. Over the decades, we have built a unique and highly specialized competence in this area and in competence that is difficult to replicate and especially valuable today when we see this enormous growth on the nuclear side. And the competence we have now and developed, we're continuing to develop that. And that is important because we see the next generation of nuclear reactors developing. So we have -- I mean, the products that we have sold so far is based on water as a cooling media. But we see very promising developments with the generation for nuclear reactors and small modular reactors based on other cooling media than water. It could be molten salt, lead, helium. And for several years, we have invested significantly in this area, and we are today talking with many of the leading players in this industry globally, and we are well positioned to also develop our business in this next generation. So to finish off the nuclear section, I would say that we have a strong market position in this area. So that's nuclear. And if I go into chemical and petrochemical now, and chemical and petrochemical, that is a segment where we also see excellent growth opportunities. And this segment represents about 1/4 of our turnover in the Tube division. And in 2024, we sold products for SEK 3.4 billion into this industry. And the products that we supply into here is the heat exchanger tubing, hydraulics and instrumentation tubing, high-temperature tubing and other types of products. And this is such a wide segment. So just for -- to give some examples of what are the subsegments in -- what are some of the subsegments in this broad segment? I will show you a couple, but we see also very promising growth prospects here. So for example, Ethylene is the most produced organic chemical globally and it's considered a basic chemical because it serves as a fundamental building block in the petrochemical industry. It is primarily used to produce plastics and chemicals. Intermediates are derived from basic chemicals and used to produce more specialized compounds or material. PTA is primarily used to manufacture polyester fibers for textiles, pet plastics, packaging material and industrial coatings. Urea is the most widely used nitrogen fertilizer globally. It boosts crop yields and ensure stable global food supply and is applied directly to soil or as part of fertilizer plants. And biofuels like sustainable aviation fuel aligns closely with chemical and petrochemical infrastructure using compatible processes and renewable feedstock. So these are just 4 examples. But this, for example, to give you an idea, this is -- these subsegments represent around 20% to 35% of our sales into the chemical and petrochemical industry. And it's interesting to see our indirect exposure to industries that you may not directly think about, if it's food or fuel or textiles, but there we are. And for these industries, and you see the different products that our tubes are used inside here on some small slides. Stainless steel tubes are absolutely essential for these 4 subsegments and for many other subsegments as well because our products are used in highly corrosive environments and high-temperature applications where the need for advanced material is absolutely necessary. And we see a trend to temperatures getting even higher and the corrosive and the environment becoming even more corrosive here. And this is a perfect match for us because this is where we come in with our advanced material. And also what you can see here on this slide, you can see when you're looking at the growth, you can see that the growth is very high in China on the ethylene side. It's big in China and India on the PTA side, it's big on the urea side. This -- the chemical and petrochemical segment is an important segment for all our regional businesses around the world. But the growth in Asia is much more dynamic and aggressive than in other parts of the world. And if you look at within Asia, China leads in volume and infrastructure, but India is catching up and is investing to become the next chemical powerhouse of the world. And on the back of this development, we have expanded our facilities in Mehsana, India and Zhenjiang in China to support growing regional demand for advanced tubing especially for the chemical and petrochemical segment. And I think these investments that we have announced and that are well known, is a sign of the commitment that we have for being a local premium producer into the local markets in Asia. And I think one of the things that we can be really proud of is the growth that we have generated in the chemical and petrochemical segment in the APAC region. Our CAGR over the last 7 years is over 20%. And of course, this is something that we hope to develop. And with our strong team and strong footprint in the APAC region, we've been able to pick up a large part of this growth in the APAC region that we saw before. And we've been able to create a solid value proposition for our customers based on local production. So that was the chemical and petrochemical segment, where we see good opportunities. If we then move into the third and final segment that I will dive into oil and gas. We have 2 primary product offerings in this area. It's the Umbilicals and it's the OCTG, Oil Country Tubular Goods. And starting with the Umbilicals. The umbilical tubes are used in offshore exploration where they supply chemical and hydraulics from the offshore platform down to the bottom of the ocean. And this is, of course, often very corrosive and high-pressure environment. And they're also supplying the tubes that you see on the seabed that goes from the production side to different wells. So it's both tubes that goes down from the offshore platform down to the seabed and then across the seabed. That's the umbilical tubes. And in offshore oil and gas exploration, the deepwater which is 300 meters and more, and ultra-deepwater, 1,500 meters and more, investments in those fields as well are higher than in more shallow fields and also in existing fields, when these fields are extended, the tieback distances which is called from like how do you get from the well to the center, those distances are increasing. So both that the Umbilicals needs to be longer from the offshore platform to the production unit and then the connections on the seabed is getting longer. That is a good development for the demand for our tubes because the need for high-strength umbilical tubing is increasing. And -- then we can go to the OCTG area. And the OCTG tubes are used inside oil wells to safely transport oil and gases from the well up from deep underground. And in this area, we are targeting the corrosion-resistant alloy part of the OCTG market, not the carbon steel or low alloyed part of the market. And exploration and development is higher in more corrosive materials -- areas where our material needs to be used. So also in this area, we have a higher growth than the general OCTG market. And for our OCTG tubing, we have a long-term strategic partnership with Tenaris. It's a USD 12.5 billion company that are a leader on the carbon steel OCTG production, and they have that. And they act as our sales partner. So Tenaris secures contracts and engages us when their carbon steel solutions are not sufficient. And for Umbilicals, we are #1 in the world. And for OCTG, we are #2 in the world. And the market outlooks for this industry, including those from the International Energy Agency, indicate that global demand for oil and gas will be relatively stable or decline only gradually until 2040 or 2050. While electrification is reshaping select industries, overall energy demand remains high and hydrocarbons like oil and gas will be a cornerstone of the future energy mix, at least up until 2040 and 2050. And you can see -- you can look at -- have different angles on this, and it's linked, of course, to different political measures. But what is, for us, the most important part here is kind of the red area that goes down, it's -- we see a rapid depletion of existing wells. So even if we're going to continue having the same output from the oil and gas industry or even slightly lower, there needs to be upstream investments. And it needs to be investments in existing fields or it needs to be investments in new fields. And our products comes in when you invest in new or existing fields. So from our point of view, we think that the outlook is positive on this side. So those were the 3 segments. And we have now like looked at these 3 segments that together represents 2/3 of our business. So it's a major part of the Tube division. And across all these 3 segments, we have established strong market positions and a key reason for why we've been able to create these strong market positions is our commitment to research and development because our strategy is to be the technology leader in the market. And our approach to R&D begins with a deep understanding of customer trends and in our prioritized segments. So if we understand the customer trends and in our prioritized segments, we have a better chance of allocating our R&D money to where it makes the best difference for us. And then we take these trends, we align them to actionable customer needs and then we develop products based on that. And the alignment from the customer trends to the customer needs, we look at what are the critical materials demands that are needed in different areas, which applications will our products be used in. We work in close collaboration with our customer with R&D and our technical marketing. And based on that, we develop value solutions for different new products or new processes. And I will give you a couple of examples of how this is working kind of in practice in -- for some of the products that we have recently launched on the market or products that we have on the -- in the R&D pipeline. And these examples kind of illustrates our customer trend-driven approach and how that is creating customer value. So if we start the nuclear -- the trends that we see in nuclear, there's a trend towards wanting to have higher safety in nuclear operations and data centers, AI and overall electrification increased needs for smaller scale modular reactors. For this, we are now developing products for the next-generation nuclear technology, including small modular reactors and Generation 4 nuclear reactors. We are developing across different technologies and new tubular material for reactor use include high-temperature resistant FeCrAl alloys. It's alloys based on Ferrum, Chrome and Aluminum, but it's interesting to solve the high-temperature problems that we have in certain part of that development. In the Chemical and Petrochemical segment, we see higher pressures and temperatures for increased process efficiency. And we see a high demanding mixed service conditions that needs advanced material with larger operational window. You can think about this as different types of raw material coming in into the chemical and petrochemical processing plants. And for this, we have created the Sanicro 35 product. That's a multipurpose grade with a performance that can match even higher alloy and more costly grades in many critical services, thus making this grade a very cost-efficient alternative for our customers. And on the oil and gas side, we see the customer trend of deeper wells and longer subsea tieback system. And for this, we have developed SAF3007. It's the next-generation super duplex stainless steel umbilical tubing, having higher strength and similar corrosion resistance as the current product 2507 that are the industry standard. And by the way, the product that is used as the skeleton for the Vasa ship here. So I think this is some examples of why we have taken the strong market positions that we have and how we're working to maintain and develop these positions going forward across different segments. As we've seen, the opportunities in our market are significant, and we are well positioned to create value for our customers and other stakeholders. But to fully capture these opportunities and deliver even better results, we must also look inward and strengthen the way we operate. We want performance, and we have 2 kind of areas that we try to put focus on in this area is to strengthen the performance culture and it's to improve our ability to leverage our strong market positions. So as part of the strength and performance culture, we want to -- we are developing an enhanced financial steering model. We want performance to be transparent, enabling better decision and sharper execution across the organization. And very soon, as we're working on this, we will be able to track performance on a lot more nodes throughout our organization. We will further decentralize accountability. And by pushing decisions closer to the customers, we will increase speed, agility, customer orientation. And I think this will -- and we will also make ourselves and even more people in the company more accountable for the areas that they are accountable for because if you're accountable for an area, but you're not financially measured on it, it's not the same. So we're trying to combine the accountability with the financial tracking. And we will agree on a common business principles that will guide us in our daily work. And these principles will guide us in our daily work, speed up decision-making, increase engagement and improve the understanding of what is required from us working in the Tube division. And when these common business principles are integrated into our culture and processes, these principles will be very powerful. And on the improved ability to leverage our strong market positions, we are clarifying our commercial excellence methodology. We can do a better job in planning for growth, selling the value of our products and offerings and tracking performance and we will enhance our product development process. It's a bit -- might sound a bit contradictory, but because it's our excellent R&D work that has taken us to where we are with a strong market position, but we are now putting a lot of effort into improving our product development process so that we will have even better -- get better bang for every R&D dollar that we spend. So altogether, these actions aim to convert our strong market positions into sustained improvements in both gross and net margins. And I will leave you with 3 key takeaways of what I talked about today. We have really strong market positions in a diverse set of customer segments globally. We see attractive market developments in our most important customer segments. We saw nuclear, we saw chemical and petrochemical. We saw oil and gas, and we're delivering well. Yet significant opportunities remain to enhance our operations and drive stronger margins and growth. Thank you for listening. Thank you. And with that, I'd like to welcome up Robert Stal, President of the Kanthal division.

So welcome, everyone, here in the room and also those of you calling in online. My name is Robert Stal. And as of February next year, I have had the position as President of the Kanthal division for around 3 years. Before that, I have a long experience within the Alleima Group. And now we have the opportunity to spend around half an hour or so talking about and deep diving into the Kanthal division. And I will elaborate a bit of where we have taken the company from a historical perspective, significantly improving our earnings and becoming a more resilient business as of today, how we have also strategically shifted our product portfolio within the business we operate in and also how we intend to build on that going forward. If we look at the Kanthal business and start looking at our customers and our customer segments, we are active in 4 different customer segments, while Industrial Heating and Medical are our prioritized growth areas. That has to do with our ability to earn money in there. We see higher margins and higher growth, and that is where we put our focus in that sense. If you look on the map on your left-hand side, you can see our global footprint. We -- looking at the size of the company, I would say that we are well represented in all 3 major economical hubs of the world, meaning North America, Europe and Asia. And that has been important and is important to us to stay close to our customers, both from a proximity perspective, but also in order to understand what kind of challenges and trends they have, but also allow us to leverage on building competence and capabilities in our organization in different parts of the world. If we look at our sales distribution as well, you can see that on an aggregated level, we're fairly evenly distributed between the 3 regions, making us exposed also to the different geographical trends that we can take opportunity in as we act in our business. If we look at the financial development over time, there's a few things I would like to highlight. To start with, as you can see that we have been able to being a much more profitable company today than what we have been historically, both by increasing our top line and at the same time, expanding our margin then being able to yield higher earnings from that perspective. If you look at the last few years, you can see that we have somewhat a declining top line, and we have been focusing on, sort of say, showing resilience to our business. And I would say that there are 2 main reasons for that. One is that we early on acted on cost where we saw volumes going down. The other one is that we have been successful in continue to grow in our targeted segments and more specifically, our medical business during this time period. And this is also an area where we have faced quite significant currency headwinds from that perspective as well. But one thing that's been very important when it comes to achieving this growth is our organic development. We have made acquisitions along the way, but the majority of the growth we have seen historically has come from organic initiatives, and that is also a very important part of our business development going forward. So despite the fact that we have addressed our cost situation to lower volumes, we have continued to have a strong focus on R&D and our product development. And during this time period as well, we have actually significantly increased our focus and spend here because we believe that this is a key enabler for being sustainable in driving profitable growth long term. And in practice, we have almost doubled our spend into R&D, both in relative and absolute numbers during the last 2 years and have now ramped up on a different level when it comes to trying to bring innovations and new products in the hands of our customers. The other part I talked about was the, sort of say, the strategic shift of our product portfolio. And on the left-hand side, you can see the share of our customer segments, actually as presented on the last Capital Market Day 2 years ago. And on the right-hand side, you can see where we are today. And if we start looking on, sort of say, the combined level, we were at 2/3 in 2023, while we can now acknowledge that the share of our prioritized target segments within our total share of revenue is up to 74%, though, so almost 3/4. What is also worth mentioning is the fantastic development of our medical business, going from 70% to 27%, which is, I think, quite an achievement in that sense. But what is also worth noticing, if you look at the Industrial Heating part, you can see that from a numbers perspective, it's a lower share today, but the reduction compared to 2023 for Industrial Heating is significantly lower than what you would observe in Consumer and Industrial segments. And looking at what we want to do is, in essence, to continue this journey. That is the key message that we're saying today. We want to continue a high pace growth within our Medical side and also scale up that business. We have quadrupled the sales within the 5 years of this. And of course, this also comes with the need of scaling organizational capabilities and putting business processes in place as well as you grow from being more of a regional player to a global business that we want to leverage further on. The other part is to use our strong position within Industrial Heating and continue to grow that into attractive subsegments that we are present in today. And I think the picture here illustrates a good opportunity. It's a high-temperature diffusion furnace in a semicon fabrication setup where our technology goes into the wafer processing that are then later being turned into semiconductor products. I alluded to earlier the importance of being innovative and investing in product development. That is also a very important area for us going forward. And all of these 3 are areas that I will come back to later in the presentation. While the 4 part is as needed as the rest of them, making sure that we are as efficient we can in our operation, but also improving our business from -- through productivity and efficiency gains. And what I can say here, if we look kind of back in the last few years, we have directed a larger amount of our CapEx into growth initiatives, taking positions both in medical and industrial heating. But if we take, for example, in our Industrial Heating segments, I foresee rather a redirection of CapEx going forward. There will be certain needs of capacity expansions in selective areas, most likely. But we will also see a higher focus and ambition of investing in our existing footprint, improving efficiency and productivity there. We will start by looking at and talking about our medical offering. And to put this into context, you can try to describe this from 3 components. I mean, we are a producer of ultrafine medical wire as thin as a hair. And these wires are metal-based, but can then be coated with certain polymeric or insulated covers, but can also be configured in multiples of 1 or 2 or 3, in essence, producing very, very small cables that are very beneficial for certain therapies within the Medical segment. The other part is that we can also configure these wires into different configurations such as you can see on the picture here, in order to achieve certain mechanical properties or meet the needs of our customers when it comes to creating the best value for our customers' devices. And the third one would be moving into wire-based components. And here, you can see an example of that with a braided nitinol filter in that sense used in different therapies. But before I talk a little bit more about the market, we will show a short movie explaining how we at Alleima every day support the quality of people's lives through our medical products. [Presentation]

So fantastic, right, being able to go to work and know that you're producing products that actually improve people's lives every day. We talk a little bit more about the market. I mean, some of you heard me say before, medical is, by definition, almost a good market to be in because over time, it has shown to grow -- outgrow global GDP from that perspective. And that is, of course, fueled by both an increased need of health care due to an aging population, but as well as welfare increase, the spending going into health care is also increased over time over time. But what is also interesting for us is to look at sort of say, niches or sort of say, trends within this that we can play an important role. And one of them is the growth in remote patient monitoring. I will come back to that as well as the increased use of minimal invasive surgery. But in essence, there is a commonality here. These products allows for a higher level of self-care. It minimize the patient's need of being in a hospital, and it improves both, so to say, the precision in care given by a care provider as well as it also reduce the cost of providing that care. So usually also supported by insurance companies. Many parts of the world, health care is supplied through insurance and not as the system we are perhaps used to in Sweden. And if you look a little bit about these trends, and we start talking about remote patient monitoring, and that is driven by the shift of sort to say, out-of-hospital treatments, but it's also an opportunity to generate data where a doctor in that sense could gather a much, much higher level of data than before and apply, for example, algorithms in order to provide a more precision-driven care in that sense and being more selective in sort of say, what treatment is needed. But also on an aggregated level, a larger set of data allows for both sort of say, medical research as well as product development in better trying to understand and work with these challenges. You saw the examples of CGM, the continuous glucose monitoring. So I thought I will try to explain another area where we're active, which is in within heart failure monitoring. And in essence, here, we are developing a sort of say, a sensor consisting of a wire configuration in that sense. And that sensor, in essence, measure your -- the health and status of your cardiovascular system in that sense. And what it does then is by that, our partners then are able to kind of conclude and see what health status your cardiovascular system has and is able to translate that more specifically to your heart health and in this case, then identifying or finding early warnings for heart failure in that sense. So it both allows the patients to -- you don't need to go to a hospital to be connected to a device to measure this, but it also allows for a doctor to be more productive and have a better control of patients with these -- with this situation. So that is a super interesting area that we see a lot of interest from our customers going into them. On a similar note, minimal invasive surgery is becoming more and more asked for in that sense. And it's the same thing here, minimal invasive surgery compared to, sort of say, open surgery, which would be the alternative. It both sort of say, reduces the trauma to tissue in a way. I mean you harm the patient less. And that means you have a more speedy recovery, which means you also spend fewer hours in a hospital bed. So not only does the patient being allowed to get home earlier after the surgery, but also there is a less need of the care provider to offer, so to say, hours in a hospital bed, which drives cost in that sense. So it's also a very cost-effective and we can also see that insurance companies are also promoting these kind of therapies to order because it's a cost-effective and good way. And here, for example, we are developing products within the area of nitinol, which is a material we got access to through one of our acquisitions in that sense. It's a super elastic and biocompatible material, which is very, very suitable for this. Another example here is connected to the most recent acquisitions that we made within Endox. What they are really good at is a product called a guidewire. And a guidewire does pretty much what it says. It's something you use in an early phase of a minimal invasive surgery, locating the affected part of your body through a guiding wire that needs to be very, very flexible and very, very thin in order to sort of say, navigate anatomical very, very narrow pathways in that sense. And after that, the surgeon can then apply different kind of surgical tools such as, for example, catheters or other things needed to perform the procedure in the right location. So that gives us an opportunity and further strengthen our product offering into this area and complementing our current business. What we're also able to do with this is to kind of packaging these wires in both a sensing and stimulating aspects, meaning able we are allowed or we're allowing for different therapies to perform certain things in close dialogues with our partners through combining different configurations of ultrafine wire in that sense. And last but not least, we see an increased request of sort of say, speed and focus when it comes to product development. Our customers and our partners ask for prototypes of medical device IDs that they have. And there is very important for us to also be swift so we can respond in a fast way with sort of say, relevant and good proposals of how we can sort of say, help them further innovate and drive their product development part. So here, we are also investing in R&D, both in North America and Europe for the time being in order to strengthen this part of our business. So if we look a little bit of where we are -- where we come from and where we are and where we're heading in that sense, this business originated from United States from our key site in Florida. This is still where we have our strongest customer base in that sense and also a very important area when it comes to innovation, but both product and technology development. We have taken the step into Europe. We have had 3 bolt-on acquisitions within Europe, establishing our footprint there, getting an access to that business, but also now being able to and capable of setting up R&D and technology structures also in Europe. And last but not least, we are now establishing ourselves for the first time organically in Asia with a factory in Penang, Malaysia, which will be operational during next year. And this is a market where we today have a low direct penetration indirectly, our customers sell here as well. But there's also an opportunity going future for further growth through geographical expansion then. And this is absolutely an area where we are actively looking and interested in acquisitions, of course, not only in Asia, I would say that goes for the whole world in that sense. And naturally as well, we don't mind growing with our U.S. customer base either, but it a little bit gives you a flavor of where we come from, where we are and how we intend to continue this, so to say, journey. So of course, with a strong customer base, follow them closely, continue to invest in R&D in being, so to say, putting new products on the market as well as taking the opportunity, so to say, of the geographical expansion that we also have. Moving along then and shifting focus now. Now we go from the world of medical to the world of electrical industrial heating. Here, we have a product offering that started ones with resistance material that has developed through heating elements, further on to heating modules and our latest addition is addition of process gas heating, both in terms of larger scale as well as higher temperatures. And what we can see has happened during the evolution of Kanthal is that we have added more value into our products, supporting our customers and providing them with better solution, solving their true challenge, which is to, in a very effective way, generate heat in the right way in the processes. So if we look a little bit in the same way of the market here and try to explain a little bit about the subsegments and how we view that within industrial heating. And if we start on sort of on the top banner of these segments, looking at electronics and semiconductor, for example, this is an area mainly driven by Asia, I would say now that we have seen a good demand during this year. And it's also fueled by the increased, sort of say, level of automation and digitalization that we see around it. Everything from semiconductor, but also from other electronic components and power electronics as well going into the electrification of car fleets is driving the demand here. And our technology plays a role in producing these products. The same goes for glass, which is in one way connected to the electronic and semicon side. For example, display glass that you have on your phone, you have on your tablets, even in your cars today that is also being generated that need from the digitalization, but also supporting -- also requiring electrical heating technology in order to be produced. We also have solar, currently a quite overinvested area, frankly. But however, long term, solar, PV solar is one of the highest, fastest-growing energy sources being invested in now. So also going forward, we believe this is an important area and a segment we're active in. If we look on the lower part and give you some few examples, when it comes to transportation, we have one exposure, which is to lithium-ion battery, also a segment that has been a little bit weaker than last year. But long term, the trend is there that the car fleets around the world is electrifying, but also looking at other areas such as underground mine, harbors, ports, airports. There's a lot of vehicle out there pursuing the way of being electrify also looking at the need of this. And the other part is that we have also seen activity and have discussions now on the other side of it, meaning recycling of lithium-ion batteries because there's a lot of batteries being out there in the -- in the life cycle perspective. And there, we see an opportunity also in that end of providing our technology in the recycling part of that. And last but not least, of course, we are also very eager to help our customers to electrify even more in their industries. And that is an area that we're also investing a lot of R&D in, but also time, of course, talking to customers and trying to help them take the step of in increasing their share of electrical heating in their operations. If you look sort of say, where do we create value from our products. And maybe it sounds a bit like a cliche, but it's actually true. If you would ask employees in Kanthal what they would do, they would say that they generate heat. And then we have a lot of products to do that in a sense. And I think that tells a lot about the culture. And I think it also tells why Kanthal has become such a strong brand within this area. And heat in this picture is illustrated where we say end user. That is where our products are then used in order to do that in that process. And there is -- that is really where we make a difference. The transactional way there could be through a furnace builder, but could be also be direct. But understanding sort of say, what products the customer needs for this heating process understanding what operational conditions they have, but also understanding how they should run their furnace operations in order to get the best bang for it, so to say, to be it as productive as possible, as efficient as possible and as sustainable as possible. And that is where we can really help our customers. And that is what we do. And then their end applications could be different. I mean, we -- you will not find Kanthal products in an electrical vehicle. You will not find it in electronics components, and you will not find it in solar cells on your roof. But in order to produce those products with high productivity, efficiency and in a sustainable way, we can enable that through electrical heating. And the other part connected to that is, of course, how we work with, so to say, our sales approach and the value selling perspective that we have heard talking about before. I mean this is, as I say, a very good opportunity to be in this position in order to be able to explain how we can create that value and then, of course, capture that through the products we supply. So we put a lot of effort into really understanding our customers' applications, what are the values that we provide and also, of course, how we should price our products in relation to that. And that is also a very good way of, sort of say, keeping competition out of the door, being the best in trying to convey and understand the value you can provide for your customers, not only supplying a product in that sense. If we look at electrification then, industrial specifically in this case, I mean, there's no doubt that there's been a policy divergence lately. There's been a market uncertainty, and this has, of course, resulted in sort of say, delay and hesitant when it comes to investments that we see as well. But if we look at the underlying trend for this and the demand for electrifying industry, we still believe that, that remains in that sense. And we do see the rising cost of carbon permits, which is incentivized having a more cleaner and more sustainable heat source in your operations. But also, if we look on sort of say, the share of operating hours in a year of natural gas, which is the largest energy competitor to electrical heating compared to electricity specifically in Europe, we can see that the percentage of those hours have in the recent years increased. And in certain Nordic countries, it's even significantly higher than this if we would look year-to-date 2025, making electrical heating also a more viable and cost -- should say, cost viable option compared to natural gas, which historically has been cheaper in that perspective, all other things aside. So if we look at, so to say, transferring this into customer trends in the same way and what we see, if we look at the industrial electrification part, one enabler there is the ability to electrically heat gases, different kind of compositions of gases, but the common denominator is usually higher volumes and higher temperatures. And there, we are developing and have developed products under the collective name of Prothal, which is our electric process gas heater lines. The flow heater that you saw earlier was -- in the movie -- was an example of that. Another example is the demonstration heater that we will now put in at Emsteel together with our partnership with Danieli. So in outside of Abu Dhabi for -- during the first half of next year, we will have the first electrical process gas heater installation at the real DRI plant. And in that case, the DRI plant is natural gas based. It's already existing today and running as we speak in a sense. And we have looked at this together with our partner in that sense, if you can take a natural gas DRI plant, combine that with electric process gas heating instead of fossil heating of that processed gas and combining that with an existing electric arc furnace, so to say, steel producing system, you can reach a CO2 saving of 60% to 70% compared to a blast furnace and even in sort of say, favorable conditions, that could go even higher. And we also believe that for many actors around the world that, that will be sufficient in order to produce in that sense. And it's a significantly, sort of say, easier and less CapEx-intense way of drastically reducing sort of say, emission connected to steel production. The other one I talked about, energy flexibility. We both see it from a supply constraint perspective. Many companies learned that, especially connected to the energy crisis in Europe a few years ago. But it also has to do with the increased to say, competitiveness of electricity if you look on the sort of say the level of operating hours over a year. So what we have now developed products from and we have installations of is a hybrid heating solutions where you, in essence, can combine natural gas and electricity. So you can either choose it from a perspective where during different heating cycles of your process can, for example, initially use gas in order to get a lot of energy in to start with and then you can maintain your heat treatment parameters running with electricity or that you can actually, depending on what available prices you have on electricity and gas, choose between your mean resources optimizing your cost of running your operations then. So these are also 2 examples of where we put focus and R&D development now into helping our customers. I would just like to share this last slide on industrial heating. We have announced capacity expansions. We have -- we're currently expanding our silicon carbide manufacturing in Perth. We're also putting those capabilities partly in the U.S. We have announced an expansion in Sakura in Japan to capture the growth that we see in the Asian region. We've just inaugurated wire capacity and capabilities in Hosur, India and also investing in, so to say, our German facility in Waldorf. And looking at the current trade political or geopolitical situation, we are well represented now. But also with the investments we're doing, we're also moving capabilities even further to those regions. So we're building even also a more resilient, so say, footprint connected to current, so to say, trade challenges, if you will, not only investing in capacity. So with that said, summarizing where we are, we have a proven financial profile where we have also seen a strong profit growth. We are keen on continuing that within our prioritized segments, and that is very much aligned to the growth and the trends we see on our customer sides. And last but not least, we have a global business, and we will be leveraging those capabilities as well, but ensuring that we also have a very strong regional presence, both when it comes to capabilities and footprint to serving our customers' needs. So with that, I would like to thank you all for listening into the update on Kanthal, and I'll take the opportunity to welcome Per Eklund for the Strip division up on stage.

Okay. Good afternoon, everybody. Very nice to meet you. My name is Per Eklund. I'm the Head of the Strip division. I took this position in March this year. So I'm quite new to this role, but I have a very long background in the Alleima/Sandvik groups and most recently from Sandvik Coromant. We will talk about the Strip division. And the Strip division consists of 2 units. One is the Precision Strip unit, which is roughly -- actually more than 90% of our revenues and another unit, which is SurfTech and the priority today will be on the precision strip part. And the main topic of the day is around margin improvement. If we take an overview of the Strip business, we have our main operations in Sandviken. Roughly 90% of our cost base is in Sweden. Our footprint, so to speak, is also a number of smaller service centers in -- one in the U.S., one in Japan and our main service center, I would say, in China. And I'll come back to why it's the main center in China. If we look at our customer base, it's quite different from the rest of the divisions. We are heavily exposed, so to speak, to the consumer industry and a significant part as well in industrial applications, which is primarily around food processing, I would say, but also to some extent, in the printing industry. And then we have a, I would say, kind of a shrinking part, which is transportation, primarily automotive, which has historically been a big area for the Strip division, but it's getting smaller. If we look at our geographical exposure, Asia is our dominant area, and China is the by far biggest part of our Chinese exposure or Asian exposure, I should say, whilst North America is very small. One of the reasons is that in the U.S. today, as an example, compressors are no longer made in the U.S. There is virtually no compressor manufacturing in the U.S. Most of that is done in Asia today. And tied to that as well, Johan talked earlier around currency exposure. And our biggest currency -- single biggest currency is the Chinese yuan. And combined today, roughly 50% of our invoicing comes from U.S. dollar and yuan. Even though the U.S. dollar is -- or the U.S. market is fairly small, we have a lot of contracts with larger customers that are in the U.S. dollar. To put it in a little context in terms of where we're coming from, if we look at going back to the COVID years, you see a peak here, which is quite different from the rest of Alleima. And there are good or good reasons for that. We have very, very limited exposure to CapEx-intense industries. The majority of our customer base is, as I said, in the consumer segment. So during the COVID years with the distorted supply chains, availability of material was a critical thing for our customers. So there was an inflated demand during those years in terms of ensuring that our customers could service their supply chains with products. That, in turn, of course, led it to -- how should I put it, less price sensitive at the time. But combined with that, we were able to keep a very low cost base at the time. Then after COVID, destocking happened and the market shrunk and price competitiveness became higher. Inflation went up, and we were not fully able to compensate the cost increases we had with price at the time. And if we look at where we are now in 2025, we've had a number of operational issues that we are addressing right now. Also, we've taken quite a bit of cost in our inventories, both one-offs, but also generally devalued our stock levels a bit. And at the same time, as many other parts of Alleima, a significant currency headwind as well. But the currency headwind, that's the new normal, so to speak. So that's what we're working on as we speak, so to speak. Looking forward, though, the ambition for the Strip division is that during this strategy period up until 2029, clearly become above-average profitability in the Alleima Group. And a lot of the focus now will be talking about how are we going to do that. If we take a quick look at our product portfolio, Johan mentioned a couple of those products where we today have a very, very strong position where we are a clear #1. One is in the compressor segment, and I'll do a little bit of a deep dive in that. But then also in the medical sector, and it is primarily what is bone saws. So if you're unfortunate to do a hip replacement as an example, the second picture to the left there, that's a bone saw that your surgeon will use. But at least you can feel confident that it will be a very, very good bone saw. Then the third picture here is knives, and that's handheld knives. Knife steel is a big product for us from a volume perspective, but it's quite a variety of products. Part of it is handheld knives for high-end chef knives as an example, but also high-end hunting knives, which is one part of the market, but there is also a big market for knife steel for food processing. And we'll come back a little bit around knife steel and how we intend to sell that. We have not been successful in selling our prime knife steel so far, which is a Damax grade a very unique product. And then last but not least, our biggest product from a pure volume perspective is razor blade steel or shaving products and this shows what we refer to as wet shaving. So if you have a regular razor, it's typically -- at least if you buy it in Europe, it's very frequently our material in it. But in addition to that as well, one of our key products is for electrical shaving, where we have a very, very strong position with premium electrical shavers. So our priorities going forward now is, one is around maintaining our technology leadership and market leadership in our core products being flapper valve steel or compressor valve steel and bone saws. We have a number of commercial excellence initiatives that we intend to drive or have actually started to execute on already, but then also work on our cost base to improve our cost base, but also to improve our capital efficiency overall. If we take a little bit of a deep dive in the compressor valve business, a compressor is used typically in refrigerators, freezers, air conditioning units, heat pumps, and it's the main component that consumes energy in those appliances. So energy efficiency is a key driver when it comes to compressors. And looking at what it is right now, roughly 20% of the electricity consumption in buildings comes from cooling. And that cooling is primarily air conditioning and refrigerators and freezers. And if you look at what is happening right now, the number of air conditioning units in India and China is tripling during this decade. And if you look at India, that trend is definitely going to continue. They have just started on an individual level to buy air conditioners, I would say. And if we look at how we work with this to safeguard our position is that we work across the whole value chain, not only with our direct customers, which is the so-called stamper. Basically, what our direct customers are doing is that they buy a piece of strip from us and then they punch out the valve. Then that valve goes into a compressor and how that compressor is operating has a very, very tight link to the actual valve. The valve sets the performance of the compressor. And sometimes some of the end users or OEMs, I should say, the white goods manufacturer. Some of them have in-house developmental compressors themselves, but the vast majority source their compressors from a designated compressor manufacturer. And more than 80% of all those compressors are made in China today. And that's why we have, over the last 15, 20 years, developed a service center in China that has safeguarded that we have this position. So what we do together with the compressor manufacturer is to safeguard that our material goes into all new designs of compressors because if we have our product specification in that compressor, that means that, that material will be used for that whole series. And those series could be in the tens of millions of compressors. So working very closely with compressor manufacturers is the key thing to make sure that we are present in the future compressors of this industry. And consequently, that's also where we spend our R&D resources primarily. One of the things that we are developing right now is to work jointly with the compressor manufacturers in working with them on the valve design and through that, also do the testing of that valve design. We have especially designed testing equipment that we have developed with our customers or compressor manufacturers, so we can shorten the lead time of bringing a new compressor to the industry or to the market. If we move on to commercial excellence initiatives, sustainability is a very critical part for us. We have a very solid base in terms of belonging to Alleima and the Alleima integrated supply chain with a metallurgy, which is very cost energy efficient and has very low emissions, so that in itself gives us a leading position, you could say. But one of the things, of course, is that a lot of our customers are also signed up to science-based targets, which means that we are scope 3 in that sense and circularity becomes a critical part. So one of the things that we have accelerated during the year is what we refer to as a buyback program. Because if you remember that picture where our customers stamp out or punch out material, there's a lot of scrap. And when we can buy that scrap back, we can put it straight into our integrated supply chain. And this is a good financial benefit both for us and our customers because we can typically pay better for that scrap than the local scrap dealer. At the same time, it's well sorted scrap, which is very cost efficient for us. So it's a very good financial aspect of this as well. And then Goran talked also about value-based selling. That is very critical for us as well, of course. To be successful at value-based selling, you need something what we refer to as technical marketing. Technical marketing competence is what translates product properties into an understandable customer value. How does those product properties add value for the customer. And that's an area where we have not been strong enough recently. So that's one area that we are investing in now in those type of capabilities and competencies. But then also as we all experienced, I think we have expectations in the digital environment where all of us, I think, are accustomed to very good response rate when we buy something online, for example. So one of the things that we are striving for is to safeguard that we move towards call it Business To Customer experience for our customers as well versus Business To Business experience. And that for sure will also increase the customer -- or improve the customer experience overall. And then last but not least, Goran mentioned as well in his starting, we are good at key account management. If we look at our top 100 customers, they contribute with a big share of our sales, and we manage them very well. But there's a weakness with that as well that becomes too dependent on how they grow. And what we need to do is to find better ways of servicing smaller customers. And the answer to doing that is to work with channel partners. Channel partners is a very cost-efficient go-to-market model. There's no associated fixed cost and they sell on something else. They'll sell on availability, which means that they can sell to a different price point. And where we have started to work with channel partners versus direct sales is primarily in the knife industry to get access to smaller knife makers. And they are typically clustered in different countries. There's one region outside Lyon in France. There's one in Solingen in Germany. There's one area in Japan. There's one area in China. And that's where we have located channel partners to work with us. We stock material at their place, and they have very short lead times to their customers, which is beneficial for all, I would say. And we kicked off this initiative end of last year. And today, we have signed up 10 partners where we have formalized agreements, where we support them with marketing. We support them how they promote themselves on their website. We train their salespeople. On top of that, we have identified 9 targeted channel partners that we're talking to right now to establish during the next few years. So we start to get a very solid global network of channel partners now. First target has been high-end knife steel, but we have already seen that there's a lot of opportunities to work with these channel partners or other products as well, which will give us a completely different reach. And this, as far as what we've seen so far, the business that we do with this distributor has a positive margin effect as well. Then if we look at the cost side, especially for the products which has large volumes, and I see a lot of opportunities to improve our cost base. And if we look at our maturity when it comes to automation, that's still on a quite low level. And we have initiated now a program to upgrade our finishing operations. Our finishing operations is our most labor-intense part, and we see a lot of opportunities there going forward now. Another factor which has hurt us during the year, especially is poor yield. I think we've underestimated the effect of poor yield on our financial results. So earlier this year, we also launched a program to improve our yield, and we've started to see effects of that already now, I would say. Then on top of that, overall, also workforce flexibility as such and last but not least, the inventory issues that we've had, I think we have started to get a really good control of our inventories in a different way, and now we really start to see effects of that as well. So inventory management will be a critical part going forward as well. So when summarizing, I think we have a lot of good activities ongoing already in execution to improve the margin because that is our priority. And as I said, during the strategy period, the Strip division should be above average -- Alleima average when it comes to profitability, make sure we manage our leading positions, which are strong today, very strong, expand our reach, strengthen our market presence, invest in digital capabilities to give a better customer experience. And last but not least, safeguard that we have a much better cost base and inventory management. So with that, thank you for your attention, both here and online. And with that, I hand over to you, Andreas.

Yes. Thank you, Per. We'll now move over to the Q&A session. And while we get sorted on stage, just a few reminders. [Operator Instructions] And with -- yes, I think we can maybe welcome our speakers back on stage. All right. Questions from the room. Yes. Maybe we start with Anders.

Anders Akerblom from Nordea. So firstly, I would like to ask a bit on your expectations of through-cycle growth in your targeted segments. You stated this is 6%. Relative to the previous Capital Markets Day, you stated that at 7% roughly. So a slight downgrade, although it's coming from a separate base, I recognize. But is there any market in particular apart from perhaps hydrogen and renewable that's driving that slight downgrade?

Maybe I should try to answer. First of all, I mean, it's not perfect science to do these things. We do them annually always as a start of the strategy period. So normally, we do this once a year, roughly this time of the year. Sometimes a little bit apples and peers. I think we have, for instance, in some of the segments more targeted towards applications where we are in. So there's nothing in particular apart from what you mentioned, especially hydrogen is lower.

And the second question, if I may, utilize both. So previously as well, sorry for the Bean Counting, but you stated that industrial, the target was for it to account for approximately 15% of the sales mix in 2030. At least at the midpoint, you're downgrading this 10% to 15% 2030 now. Is that in any way related to the recent cost-out measures that you've announced?

No, no. And I think in our plans, of course, we have a number, but then we need to have some sort of margins on that. I think one reason why we're somewhat unsure, what we're doing, we targeted sort of the growth in certain segments. And if we need sort of capacity, we reduce in industrial. And you have to remember, that is so much more volume, so they take some time. And then, of course, the one in the part, I think what will impact that number when we come to 2030 is, I guess, what is the business cycle in oil and gas at that moment. So it's -- there is no specific reason. And I think it takes time to reduce the industrial because it's still quite a lot of volume. I received one question when we took the decision to reopen the Tube Mill 68 for the nuclear. And the question was then you can reduce a lot with industrial. That's not true because the volume part for nuclear is so small than it's high revenue.

We can go straight to Adrian maybe.

Adrian Gilani here at ABG. My first question is actually for each of the divisional heads. I hope that still counts as one. So I guess how much of your current portfolio would you say is currently being priced as a value-based approach? And how much is sort of a pure price per kg or price per meter approach?

Thanks. Good question.

So the question is what are we value selling and where are we selling a contribution type of product that is hard to say. I think that it's hard to give a direct answer. But I think in the segments that I showed, the 3 segments, of course, we are value selling in those areas. And then we have house a big share of the industrial sector within our business, and that is very much supply and demand related. And I'm not in a really good position to give a percentage number there. But I think if you look at the industrial share of our business, part of the industrial share of our business is things we can value sell in. I would say it's a smaller part. The bigger part is maybe more of a contribution nature, then it's important. There's a shift also going on in that area because we are investing in the additional remelting capacity and the products that we sell out of that in the industrial sector, there's -- we can value sell those.

Any answers from the other divisional heads?

I can quickly comment on that as well. No, I think if you look at our targeted segment, medical and industrial heating, that is clearly our ambition and our sort of say, operating model when it comes to sort of say, pricing prefer. And then we can arm wrestle how good we are at it, of course. And I think you can always improve your ways of working. But when it comes to more consumer and industrial-related products, it's more difficult to claim value there by having such an approach, which is more related to, so to say, we should refer to it as a market price or similar in that sense then.

Adrian, am I okay to answer that question as well?

Yes, absolutely.

Because I can take the opportunity to put some pressure on my dear colleagues here. I would say roughly 80-20. I would say 20% is our contribution business. That does not necessarily mean that 80% is done perfectly from a value sale point of view. I think the tradition a company with a high focus on our products and technology, we should continue to have that. But I think we can improve the way we understand, discuss and sell the customer value, but it is more from a commercial improvement point of view.

Yes. Maybe we continue with Kaleb next to Adrian.

Kaleb Solomon from SEB. Kind of related to Andreas point on growth and what you said earlier, Johan, on recent CapEx sort of being more representative than historical levels. I mean, given that you're growing from a higher base. Isn't it reasonable to assume CapEx should keep growing in absolute figures for the next few years?

Do you want to?

I don't think so. It would maybe be great because that will be good idea. I think it is -- I mean, if you look at the graph or the slide I showed with a lot of initiatives ongoing, I think we are fully occupied of finishing those. So I think it would stabilize. That is my view.

And you've talked about this before, but you've kind of been able to raise prices to sort of offset tariff costs. And maybe this is very hard to answer, but do you think you'll be able to compensate in the same way if currencies keep developing in the wrong direction?

I mean I think that is more difficult. I think it's easier to have a discussion with the customer saying, I'm not prepared to pay the tax that your country is putting on my products. I think, is more difficult. I think over time, it has to be solved through -- prices could also be some footprint. But an American customer who paid $100 per kilo does not understand why you should pay $110 per kilo just because the dollar went down. So I think it's more difficult.

But I can also just add to that in -- I mean, we are in very specific niches. And of course, we have really tough competition in the different areas, but it's not that many competitors. And it's also interesting to look at where our competitors located because it's not only us that are challenged with currency situations, and that may impact the pricing to the end customer. So it could give us some more chances of also adjusting for currency, but it depends on how the competitive situation looks like and how our competitors are impacted by the currency.

But just a comment from my side. Typically, we do not involve currency in price negotiations, if you will, because when it goes the other way around, our customers know that as well, then you end up in a never-ending discussion about price levels. So it doesn't make sense always to -- even though something we need to be mindful, of course, and to Carl's point, what position do our competitors have, then sometimes we need to act and adjust based on that.

Super. Viktor, maybe?

Viktor at Danske. So also on CapEx first. And I guess when you speak about stabilizing CapEx, it sounds like a lot relates to the mix change or growth CapEx, but a lot of the other opportunities, efficiency, taking down CO2 will probably also cost money. So could you sort of quantify how much CapEx you're willing to take home to or take down CO2 and also in terms of the efficiency part, how much could that add to annual CapEx? That's first.

It's impossible to give a number of that. I think it depends on so many things. First of all, with the CapEx, we still should be cash generative. So I think looking at the balance sheet is an important part. I think it will be -- it has to be good paybacks. If there is a good payback on an investment and we have the resources to do it, normally, we would do it but I had difficulties to share a number with you.

But I'm sorry for pushing on this, but at stable CapEx, would you take down CO2 by the levels that you sort of indicated to 2030? Or would that require additional investments?

Potentially. But as I said, we have different -- we've gone from where we were 2019 to where we are today. We have reduced it by 40%, 41% without taking on any investments. To some extent, we have increased the cost of energy because we have partly some biogas and biogas, even though it's the same molecule as natural gas, it's a little bit more expensive. So different ways. We also have hydrogen on pipe. We're not going to build a hydrogen plant. We have hydrogen on pipe, sorry. We're not going to build a hydrogen plant. Potentially, yes. But what I tried to describe in the sustainability part, we are not going to invest a lot of money to claim a little bit less fossil -- more fossil energy products if there is not a customer value or if there is not a saving on the other side, then we will not do that. And...

And then secondly, I appreciate the sort of scatter plot that you showed on return on capital employed and also growth, but it seemed to be a fifth group that you didn't mention with low returns and basically no growth?

But I think I mentioned those. I mean, industrial is such an area. They exist in our portfolio, and they are not small. I mean there is a reason why they are not prioritized and that is because they are lower. On the other hand, if I just would remove them, that would have a negative impact on all the other products. So I mean it's -- it goes together. But what I was clear on is that the contribution business, which is a lot of industrial, that is important as we are. But if you want to grow that business, that growth has to generate value. There might be some opportunities. There are also some nice businesses within industrial. So this is, of course, a simplification. But it's not okay to grow that if we don't create value.

Maybe we can just hand -- pass it on to you.

Igor Tubic, DNB Carnegie. I have a question related to the OpEx and CapEx business that you have. Looking at all the growth initiatives that you have, is it fair to assume that everything is CapEx business related? Or is it -- because what I'm trying to understand is if your CapEx-related business will grow the total share of your -- and make it more cyclical, so to say.

I don't think I have a number. We could reason together on stage here. I mean what we do in medical, that is not CapEx heavy. What we do in nuclear, that is CapEx decision. I think most of the petrochemicals also CapEx related. Industrial heating, 50-50 maybe.

That's a fair assumption.

And then the second question is I wonder around the nuclear. You said before, if I remember it correctly, that you have orders until 2029. Are those based on fixed prices already? Or will you be able to increase prices if the market moves in the right direction going forward?

Yes. I think I -- I mean, we have a good order backlog for our new capacity up until 2029. So -- and we have our existing operation as well, our existing capacity. And there, we don't have as long order backlog, but still a good one. And everything that we have in our backlog are priced. But it's -- I think a comment was made before that some of the business that we now are coming out was priced after the Fukushima incident when the demand was very low. So I don't think -- it's not a big problem, I would say, that we have -- what we have in our backlog is priced.

But metals and currencies are hedged.

But can you share and give us some sort of ballpark around how much prices has increased? Is it like double digit or single digit or just to give up to understand?

In the nuclear part, I can say that maybe you can -- but we have -- when I come back to SMT end of 2017, the Tube Mill 68 was closed. Actually, the new mill was also closed. People were working elsewhere. And then suddenly started to come back, and we're really happy to book some orders. And that was not very good prices. It's also in China. That is starting to be flushed out of the system. But to give you a percentage, I cannot say.

I think it's difficult to say. But I think it's -- yes, hopefully, we will be able to show that -- show how things are developing in our quarterly results. moving forward. I think it's difficult for us to comment because it depends on the mix of customers. We're selling to different types of customers in different parts of the world. And it's that mix of customers within -- the nuclear segment is also having an impact. And it's not just pricing for individual customers, how that is developing. So I would probably say too much if I started commenting on our backlog because...

But I think one thing we could estimate, sometimes we have had Chinese orders. I guess if you compare the Chinese order with the North American order, I mean, it's more than 10% difference in price.

Right. More questions, Andreas again.

The analysts are the most active people in the room, right?

I waited for a moment. Robert, a question to you on your expectation of demand for industrial heating solutions in Europe. If we would see a potential postponement of the ETS or at least free allotment phaseout in Europe, how would that impact demand for industrial heating solutions in your view?

Specifically, that's a difficult question to answer. But I think what's important here, and I think your question is related to that, if we look today, so to say, the electrification of industries are a smaller part of our current business in that sense. It's rather an opportunity going forward in that sense. And of course, all sort of say, regulatory measures like EPS, the emission rights the cost of CO2 emissions in Europe. If that goes up, it will help us if that's delayed, that might postpone, so to say, decisions of investments going forward. But right now, what we're seeing, so to say, I would sort of say, to start with, I would rather see a pickup in general business climate and investment levels in general in Europe. I think that would be more important to us if we look a bit shorter term than specifically that question. But of course, less regulations that helps customer to take that step is, of course, not positive in a sense.

And that is -- we are part of that. We have gas fueled furnaces. Not all of ours are Kanthal fueled.

Yes.

And we reason in the same way. If we cannot make a payback calculation, that will take longer time. It's a sort of rational decision-making.

Yes. We have another question from Viktor. I just want to make sure if there's any other people in the room who wants to ask a question besides our analysts. But please go ahead.

Yes. Perhaps for you, Carl, just on -- in the Tube division and specifically in the U.S., how much would you say is energy related in the U.S. specifically, i.e., nuclear and oil and gas of that sales?

Yes. I think when we talk about tougher demand in the U.S., it's in our regional business. It's in our chemical and petrochemical business where we see uncertainty that is holding back CapEx. Then on the energy side, it's a different story. Demand is good. On the aerospace side, demand is good even though many of the aerospace customers are on fairly high stock levels. So -- but down the line demand in aerospace is very good. Underlying demand in aerospace is very good. And the question is how much -- sorry, the question was what share in the U.S.?

Yes, exactly. Is it like 50% of U.S. sales? Is it...

You will proceed from here?

Yes, that is related to nuclear and oil and gas, specifically, how much of the U.S. business?

I could -- I can't give -- do you -- could you help me with an answer? I don't give the wrong answer...

I don't think we have. I mean it differs a lot from year-to-year. I mean, it could be a nuclear project. If it's in U.S., it's good. If it's in Europe, then it's lower. So the product business makes this difficult to answer the question.

I mean I can easily say that kind of the energy part and kind of aerospace part is more than 50% of what we sell in the U.S.

And between oil and gas, is it like 50-50 split or basically...

And that I can't answer specifically for the U.S. because it depends on that information, I don't know. But in general, in oil and gas, it's that split about...

And sorry, if I just may one more, but on -- and that's for -- this one is for you, Goran. But in the indicative EBIT margin bridge that you showed, we have spoken about the mix shift historically. We sort of understand that. It seems like you've added a bit of components. So secondly, you talked about efficiency and volume leverage. Volume leverage feels like you showed that you won't grow volume so much. So it should be mostly efficiency, I guess.

It depends on how you -- I mean, if you run more complicated products through a finishing operation, even if it's not much volume on our total numbers, there's still more volume in those machines, and that gives absorption and gives leverage. Okay. But I think you're right. I think the overall strategy is the mix shift journey. But I think in certain areas, either because we see more potential or -- I mean, everything in a company does not always work in a perfect way. And I think we are deciding to drive more of the performance-related initiatives as well, both in operation. And I think you, Carl came in here and say, what a fantastic technology you have and what a product focus. And maybe we could add a little bit more focus on customer value. I think that's a very, very valid comment that you came in with. And some of you asked the question, what's the percentage in contribution and value sell. I think we could do much more value sell, but it's sales training and it takes some time.

I'm sorry, Igor, but we're over time actually. And I just wanted to finish up with a question to you, Goran, as well. If you were to give our listeners a final takeaway of the day, what will that be?

First of all, I think we are developing the company in the right direction. I think clearly, we have improved the financials of the company. We are more profitable. We are less volatile than before. And it's not coming by sort of accident. I think we have a strategy. We're executing on a strategy. And I think there's a lot of opportunities to continue this. And I think what the division President has shown in the different parts of the organization, a lot of opportunities to both generate growth, but also to drive performance improvements. That would be my summary.

Great. Thank you. And thank you all for your questions. Thank you, Goran, Johan, Carl, Robert and Per. The full program has been recorded and will be available on our website around lunchtime tomorrow. For those of you here in the room, we invite you to stay for some refreshments. Please follow our hostesses. They will guide you up to floor 6, where we can continue the discussion with management while also enjoying a pretty cool view over the Vasa Ship. And this concludes our stage program. Thank you all for joining us.